FTX says it is investigating “abnormal transactions” after the potential hack
FTX is investigating abnormal transactions as analysts said hundreds of millions of dollars worth of assets had been withdrawn, in another blow to creditors of Sam Bankman-Fried’s crypto empire after it collapsed into bankruptcy.
The company’s general counsel Ryne Miller said on Saturday that FTX was “investigating wallet movement anomalies related to the consolidation of FTX balances across exchanges”.
Elliptic, a blockchain forensics firm, said there were initial indications that $473 million in crypto assets had been stolen from FTX late Friday night.
The announcements sparked fears that FTX had been hacked as employees raced to secure billions in digital tokens that will eventually be used to pay back creditors in bankruptcy proceedings at the cryptocurrency group, which was only recently valued at $32 billion.
Tether, one of the major operators of cryptocurrencies pegged to the US dollar, said it had intervened to freeze $31.4 million of the tokens, which it suspected were moved by an FTX hacker.
A symbolic theft could compound losses for customers and creditors of FTX, which until this week was one of the biggest digital asset exchanges but filed for bankruptcy protection in the US on Friday after being unable to face a wave of customer withdrawals.
“Following the Chapter 11 bankruptcy filings, FTX US and FTX.com initiated precautionary steps to move all digital assets to [offline] Storage. The process was accelerated this [Friday] evening – to reduce harm from observing unauthorized transactions,” Miller said in tweets later shared by the main FTX account.
Miller declined to comment further.
Concerns about a potential hack were heightened after an administrator on the Telegram support group for FTX stated, “FTX has been hacked” and warned users away from the FTX website and apps.
FTX was widely used not only by do-it-yourself traders, but also by hedge funds and other sophisticated digital asset players. Galois Capital, a hedge fund whose founder is credited with spotting the collapse of cryptocurrency luna earlier this year, told investors this week that nearly half of its assets were trapped on FTX.
Genesis, a well-known crypto trading firm, has about $175 million locked up in its FTX account, the company said.
Bankman-Fried stepped down as CEO of FTX on Friday after putting the exchange, along with his trading company Alameda and 130 affiliated entities, into Chapter 11 proceedings in Delaware.
The 30-year-old entrepreneur, once one of the most respected figures in digital assets with close ties to Washington lawmakers, will be replaced by John J Ray, a restructuring specialist who oversaw the bankruptcies of Enron and Nortel Networks.
Ray said on Friday that FTX Group “has valuable assets that can only be effectively managed in an organized, joint process”.
A loss of assets to creditors would mark an early setback for the team overseeing the sprawling insolvency, which will involve up to $50 billion in assets and liabilities and 100,000 creditors, according to filings.
The US Securities and Exchange Commission is also investigating FTX, including the platform’s cryptocurrency lending products and customer funds management, according to a person familiar with the matter.